Summary
I do not doubt that there is a high probability of going down the road that William Shipman suggests ("Slippery Social Security slope," Commentary, yesterday). And you can only get there by employing the farcical claim that there is a difference of return to be gleaned from the bonds in the Social Security trust fund and the capital markets. This return is the difference between writing yourself a loan at an imaginary interest rate and your investment return. It is a fiction, of course, but unfortunately, the risk associated with your investment is not, and there is the rub. Risk increases with time, and any pension fund manager knows the uncertainty of his risky assets make that so; the longer his horizon, the more uncertain the final portfolio value.
The problem with Social Security is basic honesty, and until that gets fixed, you can expect all manner of Rube Goldberg fixes. President Bush was wrong to rationalize private ownership by intimating that all takers will get some average return, which will obviate their Social Security benefits. However, the other side always has claimed "old age insurance," and the word "social," has rarely been inserted. Mr. Shipman cites a speech by President Franklin D. Roosevelt employing the qualifier "social," but this is selective. He needs to look at all the speeches in which the qualifier was dropped. During the first 20 years of Social Security, the fund's administrators expended great effort to convince the public that their taxes were insurance premiums, buying an annuity to survive in old age. I do not think this changed until the '80s, when they started inserting language in your annual benefit estimate to the effect that you might not get what is projected.See the full content of this document
Extract
Age-Old Problems with Old-Age Policies
I am afraid that Social Security is no...
See the full content of this document
Sponsored links
